Businessmen and farmers believe that the credit policy of Zarai Taraqiati Bank Limited (ZTBL) should be reassessed to meet the modern needs of the agricultural sector.
In collaboration with the federal government, this agricultural-specific bank should adopt prudent lending, rigorous accounting controls, innovative banking solutions and austerity measures for long-term recovery as was still the case in the past. era of the 1980s, said the Federation of Pakistan Chambers. of Trade and Industry (FPCCI) the former Chairman of the Standing Committee on Agriculture, Ahmad Jawad.
Currently, the ZTBL and other regular banks have no institutional means to collect meaningful data on farms and rural businesses, he said. “They’re just not equipped to do informed agricultural finance.”
ZTBL was opened to provide agricultural loan facilities to farmers to develop the agricultural sector, Sindh Chamber of Agriculture Chairman Miran Mohammad Shah has said. “Concessionary loan programs for tractors and other agricultural implements have been his success story.”
ZTBL has a one-stop operation policy through Mobile Loan Officer (MCO), which has been very effective and has reached out to smallholder farmers.
However, lately, no such scheme for agricultural credit has come to light. “While such programs are indeed advertised, they are not widely publicized,” he said.
“ZTBL is no longer a major player,” Sindh Abadgar Board (SAB) Senior Vice Chairman Mahmood Nawaz Shah remarked. “Its financial portfolio over the past few years was around Rs 80 billion, while the total agricultural credit portfolio is Rs 1.7 trillion.”
The bank’s credit policy “is based on collections; he lends what is recovered. There is no new money coming in,” he said. “ZTBL has a strong presence in rural areas and the agents have expertise in agriculture but their role is minimal in terms of agricultural credit.”
“Without formal financing, agricultural transformation is not possible,” commented Jawad. As a result, the population will continue to face food supply problems and farmers will be at the mercy of local intermediaries and money lenders.
“Give us competitive agricultural finance and we will give you growth,” as the agricultural sector has the potential to drive growth to 5% of gross domestic product (GDP).
ZTBL’s initiatives are necessary to strengthen the lives of farmers and the agricultural sector as a whole. However, the organization failed to significantly increase the number of customers, he said.
It is unfortunate that bank officials do not interact with the farming community, especially in Sindh, GB and KP. “ZTBL simply turns the loans on the books because disbursement and collection are recorded on the papers, an act that is against the principles of its foundation.”
Today, ZTBL has become a loan collection institution as farmers delay repayment of debt due to financial constraints.
Moreover, farmers are under huge inquiries for getting simple passbook loan while the amount sanctioned against it is very low and of no use for their farming needs.
The ZTBL passbook loan facility was launched during the era of Zulfikar Ali Bhutto, Shah said. The Bank’s policies are effective but need to be implemented, he added.
Agricultural credit has become a stigma in bureaucratic circles in Islamabad. Policy makers need to make an extra effort to improve the performance of the bank, which would indirectly boost the agricultural sector.
I wonder how smallholder farmers could afford the ease of finance with the current KIBOR rates, Jawad questioned. “The chairman of ZTBL needs to understand that it is not a commercial bank and its role is to serve Pakistan’s agricultural sector.
Pakistan spends a whopping sum of around $2 billion annually on importing edible oils. In order to save precious foreign exchange, it was ZTBL’s duty to introduce concessional loans for farmers to encourage them to sow soybeans, canola and sunflower in larger areas of the country, but ZTBL did not offer such inducements,
Published in The Express Tribune, July 3rd2022.